Ant Financial, an affiliate of Chinese technology giant Alibaba, is planning to raise about $1 billion for a new fund to expand investments in emerging markets including India and Southeast Asia, according to a company executive.
The planned billion-dollar fund, whose name can roughly be translated as Ant Unicorn Fund, will focus on the “strategic businesses” of Ant Financial, including technologies and specific use cases related to online payments, said Ji Gang, vice president of Ant Financial, in an interaction with DealStreetAsia on the sidelines of the 4th Global Entrepreneurs Summit.
“Ant Financial is different from traditional financial investors since we specialize in investments centred around the strategic business of the company, including those relevant to Alipay that focuses on payment verticals and technologies,” said Ji during a speech at the event. Ji joined Ant Financial in early 2016 after working with Alibaba for seven years.
Ji said that Ant Financial will continue to back “BASIC” technologies, an acronym for blockchain, artificial intelligence (AI), security, internet of things (IoT) and computing. These technologies are seen as helping speed up the development of small and medium-sized financial institutions such as insurance firms and small-scale banks.
The Chinese fintech behemoth also plans to look into opportunities in digital financial services in emerging markets, seeking to replicate its success with products such as Alipay’s built-in virtual credit card Huabei, and mutual aid health brand Xianghubao, which boasts over 100 million users since its inception in October 2018.
“Ant Financial used to serve as a minority limited partner at many top-tier funds by picking up 5 per cent to 10 per cent stakes, but we found it far from enough for us to really understand the market and players,” said Ji.
Ant Financial, which started its overseas investment journey in India, injected capital into the country’s fintech giant Paytm about four years ago when the company only offered online phone bill payments to roughly 20 million users. Paytm now serves over 300 million users with a valuation of $16 billion after the completion of a new funding round at $1 billion last week.
“Paytm was valued at lower than $1 billion when Ant Financial initially invested in the firm about four years ago,” said Ji. “Ant Financial owns a relatively high shareholding ratio in Paytm so we may need to pour around $400 million to $500 million in its later round, which we also found difficult to follow.”
Ant Financial, as the investor behind at least eight unicorns worldwide (according to Hurun Global Unicorn List 2019), has so far poured money into more than 160 companies worldwide. It backed nearly 80 companies in 2018 alone, including six companies listed on domestic bourses.
Chinese technology giants, most prominently Alibaba and Tencent, are actively building their startup portfolios while expanding businesses around the globe. Alibaba has backed 22 unicorns while Tencent has invested in 46 unicorns, according to the Hurun list.
